The symbiotic division of labour between heterogeneous districts in the horticultural industry of Kenya, Holland and Ita

1. The symbiotic division of labour between heterogeneous districts in the horticultural industry of Kenya, Holland and Italy Fiorenza Belussi (Padua University) fiorenza.belussi@unipd.it Silvia R. Sedita (Padua University) silvia.sedita@unipd.it

2. Main aim The aim is to underline the global division of labour among four heterogeneous districts, characterized by different natural resources endowments, uneven learning systems, and a unique specialisation in production and retailing. The existing literature focus is on the global value chains GVC (Gereffi, Humphrey and Sturgeon 2005), and ID in developing countries entering GVC (Bair and Gereffi, 2001; Schmitz, 2004)

3. Important features of modern IDs Heterogeneity (Sammarra and Belussi, 2006) the socio-economic structure (including the relational structure and the type of governance); the prevalent strategy of district firms (including the degree of openness); the learning mechanism (and the attitude towards innovation); the institutional environment. Research institutions External relationships firm networks local suppliers, customers, and global supply chains (Gereffi and Bair, 2001; Gereffi et al., 2005). Network access can potentially upgrade firms in the district (Humphrey and Schmitz, 2002). Sometimes the global connections do not carry on any transferable knowledge or advanced organisational routines, but they work only as powerful governance structures whose leaders are the commercial actors. This is the case in the Netherlands, and particularly the Boskoop district, and its intense and distributed world business networks. Global division of labor

4. Research questions Is there an international hierarchical relationship between differently specialized districts worldwide? Where are located the sources of knowledge for problem solving and innovation?

5. The research fieldThe ornamental horticulture industry

6. Innovation in the ornamental horticulture industry Even though ornamental horticulture is not considered a high-tech industry, it has firmly and extensively adopted ICT (Information and Communication Technologies) and intensive agricultural technologies to improve both production and distribution systems. B2B technology solutions and e-marketplaces Bloemenveiling Aalsmeer (VBA) Process technologies automatic irrigation, fertigation, farm tractors, trailers, power cultivators, ploughs, clod busters, extraction machineries, motor mowers, and elevating trucks, pest-free cultivation, use of alternative energies.

7. Methodology Our analysis is based on secondary data on the districts� structure and performance primary data from 60 face-to-face semi-structured interviews to entrepreneurs in the four districts in the period September 2004�April 2005 (15 in Boskoop, 15 in Pistoia, and 15 in Saonara) and in November 2007 (15 in Lake Naivasha)

8. The four case studies in a semi-hierarchical ranking the Boskoop district It contains the most powerful international global retailers and the most prestigious science-based institutions whose activities are applied to in vitro plant propagation, and to new science-based varieties of seeds; the Pistoia district it produces Mediterranean plants sold internationally also through Dutch wholesalers. Here local institutions have recently developed specific bodies deputised to the technological upgrading of the local production; the Saonara district here local firms cover the Italian market, specialise in the service of landscaping, and are low exporters. the Lake Naivasha district newly emerged district, top exporter in the world of cut flowers (roses and carnations), through Dutch auctions, but also proprietary distribution channels. Many small firms and few large firms populate the district, covering the activities of propagation, growing, exporting and distribution.

9. The four districts

10. Districts� resources and capabilities

12. The symbiotic division of labour A global division of labour links the three districts along the value chain. Pistoia and Saonara must buy nearly all their small plants from the Netherlands, where breeding activities are more developed, and then grow the small plants in Italy. In some cases, adult plants are re-exported to the Netherlands, and sold on the global markets through the advanced Dutch distributive sector. Many firms in the Pistoia district buy young plants to cultivate in their nurseries from the Netherlands. However, the largest firms can sell their cultivated plants back to the Dutch garden centres. Pistoia firms are also involved in commercial activities with Saonara firms, to which they sell plants and some mechanical tools for the nursery sector, because in Pistoia some specialist firms have developed a machinery sector. All firms in Saonara have some relationships with Pistoia, for buying plants, materials, and equipment. In Naivasha Lake district, advanced activities on biological control and alternative energy deployment are in place, together with propagation activities, still the breeders come mainly from the Netherlands and Germany, and the distribution is strongly dependent on the Dutch auction system

13. Conclusions - 1 In the Netherlands, biotech activities are behind the development of knowledge in plant reproduction and in product innovation (the generation of new varieties), and in ICT applied to logistics, selling, and marketing techniques. In Italy, without a national advanced system in plant reproduction and in biotech science, we see interesting new applications of mechanical labour-saving techniques including irrigation and automation. In Kenya, the favourable climate allows to produce large quantity of cut flowers. Some improvements are in place, concerning the bio-control and the technology of the greenhouses.

14. Conclusions - 2 Our empirical analysis has shown the existence of a global value chain, composed of a variety of interrelationships between these three horticultural districts. The 4 districts are remarkably different, in research capabilities, types of products, adoption of technology, market shares, business models, and relations with local institutions. The influence of globalisation has not reduced diversity but has increased specialisation and enforced their symbiotic division of labour.

15. Conclusions - 3 Despite the lack of natural resources and unfavourable climate, high labour and energy costs, the Dutch district and the Netherlands-based horticulture industry hold a leading position. Although endowed with better natural resources, the Italian districts belong to a very weak national innovation system and are now strongly dependent on the Dutch system. The Italian producers, mainly organised in industrial districts, and despite their ancient tradition, their territorial embeddedness, and the excellent climate, became strongly dependent on the Netherlands, which is now the �leader� of a global value chain, thanks to its forefront product and process innovations. Kenian firms are upgrading on the technological frontier and on the retailing, by doing so, they�re lowering the dependence from Dutch actors.